Tax Roundup, 12/16/15: Extender deal! Permanent R&D, $500,000 Sec. 179 limit; Bonus depreciation extended through 2019.
December 16th, 2015 by Joe Kristan
It looks like we get a year off the extender watch. While normal people were asleep, someone posted the text of an extender bill agreement on the House Ways and Means Committee website. The bill would permanently several key provisions that have been only enacted for a year or two at a time up until now. It extends a few other of the Lazarus provisions through 2020, and the rest through 2016.
House Speaker Ryan requires that a bill be available for three days prior to a vote, which means the House won’t send anything to the Senate until at least Friday. The Hill reports that it’s not clear how the votes will fall, but the bill is expected to pass.
The provisions to be enacted permanently, retroactive to the beginning of 2015, include, among others:
-The $500,000 Section 179 deduction limit
-The five-year “recognition period” for built-in gains taxes for C corporations electing to be S corporations.
-The ability of IRAs of taxpayers reaching age 70 1/2 to make $100,000 annual charitable contributions that will not be included in the IRA holders income.
-The 100% exclusion for gains on certain original issue C corporation stock held for five years.
-The research credit.
-The alternative deduction for state and local sales taxes.
Other provisions to be made permanent include special breaks for conservation easements, the deduction for state and local taxes, and the above-the-line deduction for out-of-pocket educator expenses.
To get the Democratic leadership to sign off on the deal, Republican negotiators agreed to make permanent the child tax credit, the enhanced earned income tax credit, and the “American Opportunity Tax Credit” for college costs.
50% bonus depreciation is to be extended from the beginning of 2015 through 2019, along with the Work Opportunity Tax Credit. Also enacted through 2019 is the “New Markets Tax Credit,” a great geyser of corporate welfare.
I count 29 other provisions extended through 2016. The credits for biodiesel, renewable diesel, wind energy and residential solar are among these, along with the exclusion for qualified mortgage forgiveness and the above-the-line deduction for qualified college costs. These shorter-lived extenders also include special interest confections such as the 7-year depreciable life for speedways and special film expensing rules. I don’t know whether any extenders missed the cut.
There’s more than extenders here. This thing has 233 pages of stuff, much of which has nothing to do with extenders. A few of the major items I note at first glance are:
-A moratorium on the Obamacare medical device tax.
-Acceleration of the deadline for filing W-2s with the government to January 31, from the current February 28 deadline for paper copies and March 31 for electronic filers. This is to make it easier to match refund claims to W-2s before refunds are issued.
-Exclusion from income for payments made to wrongfully-incarcerated individuals.
-Allowing the purchase of computers for students as a qualified Section 529 plan expenditure, effective for 2015.
-A new charitable deduction for contributions to “agricultural research organizations.”
-Restrictions on tax-free REIT spin-offs.
-New restrictions on the ability to qualify as a tax-exempt small insurance company.
-Technical amendments to the new partnership audit rules.